Peugeot Citroen Might Build Cars In India With General Motors

Employees of French carmaker PSA Peugeot Citroen work on the new engine "EB" assembly line at the company engines factory in Tremery near Metz, North Eastern France, December 1, 2011. Photo: REUTERS

PSA Peugeot Citroen may manufacture cars in India with General Motors as the new partner, said Gregoire Olivier, Peugeot's head of Asian operations, according to a report by Reuters. The move would effectively lead to discarding its planned $850 million investment in its own manufacturing facility in India, Reuters report said.

Speaking in an interview at the Beijing auto show, Olivier said that Peugeot would like to explore ways to use GM's plants in India for manufacturing its cars in the country.

We're not going to move forward by building our own factory as we'd planned to, Olivier said as reported by Reuters.

We now have GM as a global partner, and GM has factories in India, so we're obviously reviewing our plans from the top. There are a lot of other ways to enter India now that they don't require us to put 600 million Euros on the table, he said.

Olivier said that the company might go by its earlier plans of entering the Indian car market with a small and compact car, the report said.

However, GM's spokeswoman Lori Arpin said that the company has no plans to assemble cars for Peugeot in India and refused to elaborate further on the issue.

The Paris-based car maker Peugeot was considering various options to return to the fast-growing Indian car market, which it had exited in 1997 after a failed joint venture - Premier Automobile Ltd.

General Motors have plants in Maharashtra and Gujarat in India, while Peugeot had announced last September an $850 million investment in a factory in Sanand, Gujarat. According to the proposed plan, the Peugeot plant in Sanand was to roll out 170,000 cars per annum.

Nevertheless, in mid-February, the company announced that it was rescheduling its India plan amid grim financial situation, Economic Times reported.

GM and PSA Peugeot announced a global alliance end of February, according to which the Detroit carmaker would buy a 7 percent stake in Europe's second-largest auto company, Economic Times reported.

Analysts feel that expanding the Peugeot-GM alliance to India might not help strategically as both companies are currently targeting the same market segment in India, the report said.

Commenting on the partnership with Peugeot, GM Chief Executive Dan Akerson said in Beijing that the alliance is a Euro-centric play. Cooperation opportunities also existed in Asia, South America and in specific vehicle technologies, he added, according to the Reuters report.